Samsung announced its acquisition of Logan, Utah-based YESCO Electronics, LLC, a notable manufacturer of LED signs and displays. The terms of the deal have not been publicly disclosed.

Our Analysis

This acquisition clearly reinforces Samsung’s strategy of incorporating direct-view LED video display technology into their existing product mix to seamlessly cater to both indoor and outdoor digital signage applications.

In February at Integrated Systems Europe 2015, Samsung introduced a 1.1 mm pixel pitch LED video display for the high brightness indoor market, with the product set to be released in 2016. With the acquisition, Samsung has immediate access to YESCO’s LED video product lines, and most importantly, to the company’s existing technical support and servicing capabilities.

Additionally, in terms of product line up, there seems to be a complementary aspect to this acquisition. While Samsung’s focus is on sub 2.0 mm high density pixel pitch products that better aligns with their outdoor LCD products, YESCO has traditionally been an outdoor player, with products starting from 6.0mm pixel pitch.

Selling, marketing, installing and servicing LED video products requires a different set of experiences and logistics which Samsung currently lacks and will need a considerable amount of lead time to develop. Unlike large format LCDs, LED video displays do not come in pre-defined sizes. Rather, each vendor has their own configurations for modules consisting of LED lamps or chips, which are then tiled to form a larger custom sized display for individual clients. External processers, content management software and controllers are then added to engineer a total solution for clients.

Needless to say, LED video displays cannot to be sold, marketed, installed and serviced as an “out of the box” large format LCD product. There is a considerable amount of pre-sales and post-sales service and system integration required. Through YESCO’s acquisition, Samsung is now in a position to offer this to their intended target markets in the United States.

So what does YESCO get out of this deal? First of all, the direct-view LED video market is rife with competition from low-cost companies mostly based in Shenzhen, China. Smaller local companies such as YESCO have been particularly hit by such competition, while premium brands such as Daktronics, Barco, and Mitsubishi are able to maintain revenues due to their reputation in the market. Samsung provides YESCO and its customers the credibility of a global multinational brand.

In summary, this acquisition seems to provide a symbiotic relationship for the two companies. It will be interesting to see how Samsung leverages this partnership to gain a foothold outside of the US and in the global arena of the LED video market.